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Sat, Jul 11, 2009 - Page 10 News List

UBS cannot disclose identities: CEO memo

REUTERS , BANGALORE

The logo of Swiss bank UBS is pictured in front of the Swiss Federal Palace in Bern on Thursday. Investors bet on Thursday that the US would not go as far as shutting down UBS AG in a tax dispute, instead expecting the Swiss bank to be hit by a hefty fine as part of a swift out-of-court settlement.

PHOTO: REUTERS

UBS cannot comply with a US request to disclose the identity of 52,000 US secret account holders, bank chief executive Oswald Gruebel said in an internal memorandum, a source familiar with the situation said.

The UBS chief executive officer sent the confidential memorandum to the bank’s top executives on Thursday, the source said, confirming comments reported earlier in the day by the New York Times.

Gruebel, hired in February to turn around the troubled Swiss wealth manager, said turning over the names “would require UBS to violate Swiss criminal law, and we simply cannot comply,” the paper quoted Gruebel as saying in the memo.

HEARING

A court hearing seeking to assess whether UBS is to disclose the names to US tax authorities is to start on Monday.

The judge presiding over the hearing has ordered the US government to say on Sunday whether it was prepared to shut UBS in the US as part of a battle to learn the identity of the accounts suspected of being used by Americans to avoid taxes.

Switzerland, the world’s biggest offshore banking center, vowed in filings to the US court to prevent UBS from handing over client data to the Internal Revenue Service (IRS) to defend bank secrecy laws, saying the tax case is souring diplomatic ties.

UBS said in an emailed statement: “The IRS summons puts UBS in an untenable position, caught between the laws of two sovereign nations.”

VIOLATIONS

“Honoring the IRS summons would require UBS to violate Swiss criminal law,” it said.

A UBS spokesman in Hong Kong declined to comment on the memo.

Even though tension between the two nations has been raised over the issue, Swiss National Bank Chairman Roth said he had no doubt that the lawsuit against the country’s former flagship bank UBS in the US would be resolved.

“We have no doubt that this bilateral fight will be resolved,” Roth told the German daily Handelsblatt on its Web site version.

“This fight is obviously an important issue for UBS. But the bank has also taken measures to reduce risks. UBS is a strongly capitalized bank today,” he said.

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